PLACEMENT AGREEMENT
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This Placement Agreement (the "Agreement") is made as of this 28th day
of August, 2000 by and between SYMPHONY TELECOM INTERNATIONAL, INC., a Utah
corporation (hereinafter the "Seller"), and GEEK SECURITIES, INC., a
Pennsylvania corporation (hereinafter the "Placement Agent") (Seller and
Placement Agent are sometimes hereinafter referred to collectively as the
"Parties").
RECITALS:
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A. The Parties have had numerous discussions, including a meeting in
Toronto, Canada, at the offices of the Seller, whereby the Placement Agent
agreed, subject to the terms and conditions herein, to use its reasonable best
efforts to solicit subscriptions for the shares of the Seller in the aggregate
amount of up to (U.S.) $100 million to one or more accredited investors (the
"Offering"); and
B. The Seller hereby desires to engage the Placement Agent, and the
Placement Agent agrees to act in such capacity, for the private placement of the
Private Placement Shares in the Offering in accordance with the applicable state
and federal securities laws and the terms and conditions herein; and
C. Seller has prepared a private placement memorandum (the "Private
Placement Memorandum") in connection with the Offering and agrees to supply a
sufficient number of copies of such document to the Placement Agent for the
Potential Investors (as defined herein); and
D. The Parties desire that this Agreement definitively set forth the
agreements reached between them as to the Placement Agent's engagement for the
Offering;
NOW, THEREFORE, in consideration of the premises, mutual promises,
covenants, terms and conditions herein, and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged by
the Parties, the Parties hereby agree as follows:
1. RECITALS
The above recitals are true, correct, and complete and are incorporated
herein by reference.
2. APPOINTMENT OF PLACEMENT AGENT
(a) Subject to the terms and conditions herein, the Seller hereby
appoints the Placement Agent to act as Seller's agent for purposes of offering
the Private Placement Shares to "accredited investors" (the "Potential
Investors"), as defined in Rule 501 of Section D of the Securities Act of 1933,
as amended (the "Act"), and Placement Agent hereby accepts such appointment all
in accordance with the applicable state and federal securities laws and the
terms and conditions of this Agreement. Placement Agent's acceptance hereunder
is on a reasonable best-efforts basis, without any guarantee of finding buyers
for the Private Placement Shares.
<PAGE>
(b) Seller hereby acknowledges and agrees that during the course of the
negotiation of this Agreement, Placement Agent has, on behalf of Seller, placed
the number of Private Placement Shares in such transactions as are set forth on
Exhibit A, attached hereto, and that the terms and conditions of this Agreement
shall be applicable to all such Private Placement Shares.
3. NON-EXCLUSIVITY
Placement Agent's engagement hereunder shall on a non-exclusive basis.
4. PURCHASERS
The Parties hereby agree that Placement Agent shall use its reasonable
best-efforts to obtain investments from Potential Investors who are accredited
investors. Placement Agent agrees to present to all Potential Investors who
intend to purchase the Private Placement Shares a subscription agreement
prepared by Seller in the form and substance reasonably acceptable to Placement
Agent's counsel (the "Subscription Agreement") for execution by such Potential
Investors. Placement Agent agrees to collect and submit to Seller all
Subscription Agreements executed by Potential Investors immediately upon
Placement Agent's receipt of same. Notwithstanding the foregoing, Seller may
determine that it is desirable to accept Subscription Agreements from
non-accredited investors, in which case Seller shall, before accepting any such
Subscription Agreements, obtain an opinion from its counsel in form and
substance reasonably acceptable to Placement Agent's counsel that accepting such
subscriptions will not adversely affect any private placement exemption upon
which Seller relied in connection with the Offering.
All Potential Investors must execute the a Subscription Agreement,
which shall contain representations and warranties as to their knowledge,
experience and sophistication in making this decision to purchase the Private
Placement Shares and acknowledgments of the risks associated with respect to
making an investment in the Seller.
5. SHARES
The term "Private Placement Shares" shall mean the shares of the
Seller's common stock ("Common Stock") offered or sold in the Offering with an
aggregate offering price of up to approximately (U.S.) $100 million. The Private
Placement Shares shall be "restricted securities" and bear a restricted legend
thereon, all with reference to Rule 144 promulgated under the Act
6. PRICE AND REGISTRATION
The per share price of the Private Placement Shares shall be as
determined by written instrument duly executed by the parties hereto as of the
date of each transaction for the placement of the Private Placement Shares,
provided that the price of such Private Placement Shares shall be discounted.
<PAGE>
Unless the Seller and the Actual Investors agree otherwise, and subject
to the requirement that each Actual Investor reasonably cooperate with Seller by
supplying all necessary information to assist Seller in the related filings for
same, the Seller agrees that on or by October 31, 2000, the Seller will file a
registration statement for the Private Placement Shares under the Act, at its
sole cost in accordance with the appropriate form of registration statement such
that, following effectiveness of the registration, the Private Placement Shares
will be freely tradable securities, subject to customary holding periods, or be
without legend thereon so that they may be freely tradable. All Private
Placement Shares subsequently sold shall be similarly registered by the
appropriate means.
The term "Actual Investor" shall mean any Potential Investor (i) who
has submitted an executed Subscription Agreement to Seller, (ii) who has fully
paid for his or its subscriptions for the Private Placement Shares and (iii)
whose Subscription Agreement has been accepted by the Seller.
7. TERM
The term of this Agreement shall commence as of this date and shall
continue for a period of sixty days unless otherwise terminated in accordance
with this Section 7 (the "Initial Term"). Thereafter, this Agreement shall
automatically renew on a month-to-month basis unless either party delivers
written notice of its election not to renew this Agreement within five days
prior to the end of any calendar month after the Initial Term during which this
Agreement is in effect. The parties may mutually agree in writing to terminate
this Agreement at any time. No termination, however, shall effect the
disposition of monies accrued and due from Purchasers.
Upon a Default (as defined below) by either party, the other may
terminate this Agreement by delivering written notice of such Default to the
other party and providing fifteen days to cure such Default. If the defaulting
party has not cured such Default within the cure period, the non-defaulting
party may immediately terminate this Agreement. For purposes of this Agreement,
either party shall be in "Default" if such party has materially breached (i) any
of its respective representations and/or warranties hereunder or (ii) any of its
respective covenants, agreements or other obligations hereunder.
8. SELLER REPRESENTATIONS
Seller hereby makes the representations and warranties set forth in
Exhibit B, attached hereto and incorporated herein, all of which are true on the
date hereof and shall be deemed to be made again and shall be true and correct
on each of the Closing Dates set forth in Section 6 of this Agreement.
9. PLACEMENT AGENT REPRESENTATIONS
The Placement Agent hereby makes the following representations to
Seller:
the Placement Agent is duly registered as a broker and dealer under
applicable provisions of federal and state law;
<PAGE>
The Placement Agent is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), and is in compliance with
applicable securities laws, and rules and regulations, including those
promulgated by the NASD; and
The Placement Agent will conduct its activities hereunder in accordance
with applicable laws and rules and regulations.
10. FEES
For and in consideration of Placement Agent's services hereunder,
Seller agrees to pay Placement Agent the Commission (as defined below) in the
following manner:
Seller shall pay Placement Agent $.02 for each share of the Private
Placement Shares sold due to the efforts of the Placement Agent in the Offering
(the "Commission").
Within fifteen days after Seller's acceptance of an executed
Subscription Agreement submitted as a result of Placement Agent's efforts and
Seller's receipt of the purchase price for all of the Private Placement Shares
purchased under such Subscription Agreement, Seller will forward the Commission
earned for such subscription to Placement Agent.
11. INDEMNIFICATION BY SELLER
The Seller agrees to indemnify and hold harmless the Placement Agent
(for purposes of this Section 11 "Placement Agent" shall include the officers,
directors, partners, employees, agents and counsel of the Placement Agent, and
each person, if any, who controls the Placement Agent ("controlling person")
within the meaning of Section 15 of the Act or Section 20(a) of the Securities
Exchange Act of 1934 (the "Exchange Act"), from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries and suits in respect thereof), whatsoever
(including but not limited to any and all costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against such
action, proceeding, investigation, inquiry or suit, commenced or threatened, or
any claim whatsoever), as such are incurred, to which the Placement Agent or
such controlling person may become subject under the Act, the Exchange Act or
any other statute or at common law or otherwise or under the laws of foreign
countries, arising out of or based upon (A) any untrue statement or alleged
untrue statement of a material fact contained (i) in the Private Placement
Memorandum or any communication by Seller to Potential Investors or Actual
Investors or any communication by Placement Agent to any Potential Investor or
Actual Investor based on information provided by Seller; or (ii) in any
application or other document or written communication (in this Section 11
collectively called "application") executed by the Seller or based upon written
information furnished by the Seller filed, delivered or used in any jurisdiction
in order to qualify the Private Placement Shares under the securities laws
thereof or filed with the Securities and Exchange Commission, any state
securities commission or agency, Nasdaq or any other securities exchange, (B)
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or (C)
any breach of any representation, warranty, covenant or agreement of the Seller
contained herein.
The indemnity agreement in this subsection (a) shall be in addition to
any liability which the Seller may have at common law or otherwise.
<PAGE>
Promptly after receipt by Placement Agent under this Section 11 of
notice of the commencement of any action, suit or proceeding, Placement Agent
shall notify Seller in writing of the commencement thereof (but the failure so
to notify shall not relieve Seller from any liability which it may have under
this Section 11 except to the extent that it has been prejudiced in any material
respect by such failure or from any liability which it may have otherwise). In
case any such action, investigation, inquiry, suit or proceeding is brought
against Placement Agent, and it notifies Seller of the commencement thereof,
Seller will be entitled to participate therein, and to the extent it may elect
by written notice delivered to the Placement Agent promptly after receiving the
aforesaid notice from the Placement Agent, to assume the defense thereof with
counsel reasonably satisfactory to the Placement Agent. Notwithstanding the
foregoing, the Placement Agent shall have the right to employ its own counsel in
any such case but the fees and expenses of such counsel shall be at the expense
of the Placement Agent unless (i) the employment of such counsel shall have been
authorized in writing by the Seller in connection with the defense of such
action at the expense of the Seller, (ii) the Seller shall not have employed
counsel reasonably satisfactory to the Placement Agent to have charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) the Placement Agent shall have reasonably concluded that
there may be defenses available to it which are different from or additional to
those available to Seller (in which case the Seller shall not have the right to
direct the defense of such action, investigation, inquiry, suit or proceeding on
behalf of the Placement Agent), in any of which events such fees and expenses of
one additional counsel shall be borne by the Seller. Anything in this Section 11
to the contrary notwithstanding, Seller shall not be liable for any settlement
of any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld. Seller will not, without the
prior written consent of the Placement Agent, settle, compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, investigation, inquiry, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Placement Agent is the actual or potential party to such claim or action),
unless such settlement, compromise or consent (i) includes an unconditional
release of the Placement Agent from all liability arising out of such claim,
action, suit or proceeding and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of the
Placement Agent.
12. INDEMNIFICATION BY PLACEMENT AGENT
The Placement Agent agrees to indemnify and hold harmless the Seller
(for purposes of this Section 12, "Seller" shall include the officers,
directors, partners, employees, agents and counsel of the Seller, and each
person, if any, who controls the Seller ("controlling person") within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several (and actions, proceedings, investigations, inquiries and suits in
respect thereof), whatsoever (including but not limited to any and all costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Placement Agent or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) the use or
distribution by the Placement Agent of any unauthorized sales literature,
advertisements, information, statements or representations; (B) any untrue
statement of a material fact contained in information furnished in writing by
the Placement Agent to the Seller and used in the Private Placement Memorandum
or any omission, or alleged omission, to state a material fact in connection
with information furnished in writing by the Placement Agent to the Seller and
necessary to make such information, in light of the circumstances under which it
was furnished, not misleading, or (C) a material breach of the Placement Agent's
obligations under of this Agreement.
<PAGE>
Promptly after receipt by Seller under this Section 12 of notice of the
commencement of any action, suit or proceeding, Seller shall notify Placement
Agent in writing of the commencement thereof (but the failure so to notify shall
not relieve Placement Agent from any liability which it may have under this
Section 12 except to the extent that it has been prejudiced in any material
respect by such failure or from any liability which it may have otherwise). In
case any such action, investigation, inquiry, suit or proceeding is brought
against Seller, and it notifies Placement Agent of the commencement thereof,
Seller will be entitled to participate therein, and to the extent it may elect
by written notice delivered to the Seller promptly after receiving the aforesaid
notice from the Seller, to assume the defense thereof with counsel reasonably
satisfactory to the Seller. Notwithstanding the foregoing, the Seller shall have
the right to employ its own counsel in any such case but the fees and expenses
of such counsel shall be at the expense of the Seller unless (i) the employment
of such counsel shall have been authorized in writing by the Placement Agent in
connection with the defense of such action at the expense of the Placement
Agent, (ii) the Placement Agent shall not have employed counsel reasonably
satisfactory to the Seller to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) the Seller
shall have reasonably concluded that there may be defenses available to it which
are different from or additional to those available to Placement Agent (in which
case the Placement Agent shall not have the right to direct the defense of such
action, investigation, inquiry, suit or proceeding on behalf of the Seller), in
any of which events such fees and expenses of one additional counsel shall be
borne by the Placement Agent. Anything in this Section 12 to the contrary
notwithstanding, Placement Agent shall not be liable for any settlement of any
claim or action effected without its written consent; provided, however, that
such consent was not unreasonably withheld. Placement Agent will not, without
the prior written consent of the Seller, settle, compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
investigation, inquiry, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the Seller is the actual
or potential party to such claim or action), unless such settlement, compromise
or consent (i) includes an unconditional release of the Seller from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of the Seller.
13. REIMBURSEMENT
In connection with the Placement Agent's activities hereunder, Seller
shall reimburse Placement Agent for all costs and expenses incurred by Placement
Agent, provided that the same are approved in writing by Seller.
14. MISCELLANEOUS PROVISIONS
Gender. Wherever the context shall require, all words herein in the
masculine gender shall be deemed to include the feminine or neuter gender, all
singular words shall include the plural, and all plural shall include the
singular.
<PAGE>
Severability. If any provision hereof is deemed unenforceable by a
court of competent jurisdiction, the remainder of this Agreement, and the
application of such provision in other circumstances shall not be affected
thereby.
Further Cooperation. From and after the date of this Agreement, each of
the parties hereto agrees to execute whatever additional documentation or
instruments as are necessary to carry out the intent and purposes of this
Agreement or to comply with any law.
Waiver. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the waiving party. The failure of any party at
any time to insist upon strict performance of any condition, promise, agreement
or understanding set forth herein, shall not be construed as a waiver or
relinquishment of any other condition, promise, agreement or understanding set
forth herein or of the right to insist upon strict performance of such waived
condition, promise, agreement or understanding at any other time.
Expenses. Except as otherwise provided herein, each party hereto shall
bear all expenses incurred by each such party in connection with this Agreement
and in the consummation of the transactions contemplated hereby and in
preparation thereof.
Amendment. This Agreement may only be amended or modified at any time,
and from time to time, in writing, executed by the parties hereto.
Captions. Captions herein are for the convenience of the parties and
shall not affect the interpretation of this Agreement.
Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and may be executed by
fax.
Assignment. This Agreement is not assignable.
Entire Agreement. This Agreement and the exhibits attached hereto
constitute the entire agreement and understanding of the parties on the subject
matter hereof and supersede all prior agreements and understandings.
Construction. This Agreement shall be governed by the laws of the State
of Florida without reference to conflict of laws and the venue for any action,
claim or dispute in respect of this Agreement shall be such court of competent
jurisdiction as is located in Miami-Dade County, Florida. The parties agree and
acknowledge that each has reviewed this Agreement and the normal rule of
construction that agreements are to be construed against the drafting party
shall not apply in respect of this Agreement given the parties have mutually
negotiated and drafted this Agreement.
<PAGE>
Cooperation. The parties hereto agree to cooperate with one another in
respect of this Agreement, including reviewing and executing any document
necessary for the performance of this Agreement, to comply with law or as
reasonably requested by any party hereto, or legal counsel to any party hereto.
Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
telecopy or by overnight courier service to the respective parties as follows:
if to Seller, to:
Symphony Telecom International, Inc.
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Attention: President
Facsimile: 888-479-6746
with a copy to:
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Attention:
Facsimile:
if to the Placement Agent, to:
GEEK Securities, Inc.
3 Penn Center, West
Pittsburgh, Pennsylvania 15276
Attention: Tony Sharma
Facsimile: 412-249-4350
with a copy to:
Morgan, Lewis & Bockius LLP
5300 First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2339
Attention: Ethan W. Johnson, Esq.
Facsimile: 305-579-0321
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy shall be deemed effective
on the first business day at the place of which such notice or communication is
received following the day on which such notice or communication was sent. Any
notice or communication sent by registered or certified mail shall be deemed
effective on the fifth business day at the place from which such notice or
communication was mailed following the day in which such notice or communication
was mailed.
<PAGE>
Independent Legal Counsel. The parties hereto agree that (i) each has
retained independent legal counsel in connection with the negotiation,
preparation and execution of this Agreement, (ii) each has been advised of the
importance of retaining legal counsel, and (iii) by the execution of this
Agreement, each party who has not retained independent legal counsel
acknowledges having waived such right.
Survival. Sections 6, 8, 9, 10, 11, 12, 13 and 14 of this Agreement
shall survive any termination hereof.
(Signature Page Follows)
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Placement
Agreement to be executed as of the date first written above.
Seller:
SYMPHONY TELECOM
INTERNATIONAL, INC.
BY: /s/ GILLES A. TRAHAN
ITS: CEO
Placement Agent:
GEEK SECURITIES, INC.
BY: /s/ Authorized Officer
<PAGE>
A-1
A-2
Exhibit A
Private Placement Shares Sold Prior to Execution of this Agreement
<PAGE>
Exhibit B
Representations and Warranties
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Capitalized terms not otherwise defined herein shall have the meaning
ascribed thereto in the Placement Agreement dated August 28, 2000, by and
between Symphony Telecom International, Inc. and Geek Securities, Inc. (the
"Agreement")
The Seller represents and warrants and covenants to the Placement Agent
that:
(a) The Private Placement Memorandum relating to the Seller and the
Private Placement Shares has been prepared by the Seller under the applicable
state and federal securities laws and regulations. True and complete copies of
the Private Placement Memorandum have been delivered to the Placement Agent.
(b) The Private Placement Memorandum, including the financial
statements included therein will comply with all applicable provisions of the
state and federal securities laws and regulations and will contain all
statements required to be stated therein in accordance with the applicable state
and federal securities laws and regulations. No part of the Private Placement
Memorandum will contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading. The Seller will not distribute any offering
material in connection with the Offering or sale of the Common Stock, other than
the Private Placement Memorandum.
(c) The Seller is duly organized, validly existing and in good standing
under the laws of Utah. The Seller has full power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or leased
by it and to conduct its business as described in the Private Placement
Memorandum. The Seller is duly licensed or qualified to do business and in good
standing as a foreign organization in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified will not have a material adverse effect on the
ability of the Seller or its subsidiaries to carry on its business as presently
conducted. Except as disclosed in the Private Placement Memorandum, the Seller
does not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity. Complete and
correct copies of the articles or certificate of incorporation and of the bylaws
of the Seller and all amendments thereto have been delivered to the Placement
Agent, and no changes therein will be made subsequent to the date hereof and
prior to the Closing Dates.
(d) The issued and outstanding shares of capital stock of the Seller
have been validly issued, are fully paid and nonassessable and, other than as
set forth in the Private Placement Memorandum, are not subject to any preemptive
or similar rights. Except as set forth in the Private Placement Memorandum, such
shares are not subject to any preemptive or similar rights. The Seller has an
authorized, issued and outstanding capitalization as set forth in the Private
Placement Memorandum as of the dates referred to therein. The description of the
securities of the Seller in the Private Placement Memorandum are complete and
accurate in all respects. Except as set forth in the Private Placement
Memorandum, the Seller does not have outstanding any options to purchase, or any
rights or warrants to subscribe for, or any securities or obligations
convertible into, or exchangeable for, or any contracts or commitments to issue
or sell, any shares of capital stock or other securities.
<PAGE>
(e) The Agreement has been duly authorized and validly executed and
delivered by the Seller and is a legal, valid and binding agreement of the
Seller enforceable against the Seller in accordance with its terms, subject to
the effect of applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and equitable principles of general applicability.
The form of the Subscription Agreement has been duly authorized and validly
executed and delivered by the Seller and is a legal, valid and binding agreement
of the Seller enforceable against the Seller in accordance with its terms,
subject to the effect of applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and equitable principles of general
applicability.
(f) The issuance and sale of the Private Placement Shares has been duly
authorized by the Seller, and the Private Placement Shares, when issued and paid
for in accordance with the Agreement, will be duly and validly issued, fully
paid and nonassessable and will not be subject to preemptive or similar rights.
The holders of the Private Placement Shares will not be subject to personal
liability by reason of being such holders. The Private Placement Shares, when
issued, will conform to the description thereof set forth in the Private
Placement Memorandum.
(g) The financial statements and the related notes and schedules
included in the Private Placement Memorandum present fairly the financial
condition of the Seller as of the dates thereof and the results of operations,
stockholders' equity (deficit) and cash flows of the Seller at the dates and for
the periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed therein. No other financial statements
or schedules of the Seller or any other entity are required by the applicable
securities laws to be included in the Private Placement Memorandum. Seller's
accountants (the "Accountants"), who have reported on such financial statements
and schedules, are independent accountants with respect to the Seller as
required by the applicable securities laws. The financial statements of the
Seller and the related notes and schedules included in the Private Placement
Memorandum have been prepared in conformity with the requirements of the
applicable securities laws and present fairly the information shown therein.
(h) The Seller is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
(i) Except as set forth in the Private Placement Memorandum, there are
no actions, suits or proceedings pending or to the Seller's best knowledge,
threatened against or affecting the Seller or any of its officers in their
capacity as such, before or by any federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding would reasonably be
likely to materially adversely affect the business, properties, prospects,
condition (financial or otherwise) or results of operations of the Seller taken
as a whole.
(j) The Seller has, or prior to the Closing Dates will have, (i) all
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its business as presently conducted except
where the failure to have such governmental licenses, permits, consents, orders,
approvals and other authorizations would not have a material adverse effect on
the business, properties, prospects, condition (financial or otherwise) or
results of operation of the Seller, (ii) complied with all laws, regulations and
orders applicable to either it or its business, where the failure to so comply
would have a material adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operations of the Seller, and
(iii) performed all its obligations required to be performed, and is not, in
default, under any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement, lease, contract or other
agreement or instrument (collectively, a "contract or other agreement") to which
it is a party or by which its property is bound or affected, except as otherwise
set forth in the Private Placement Memorandum and except where such default
would not have a material adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operations of the Seller, and,
to the Seller's best knowledge, no other party under any contract or other
agreement to which it is a party is in default in any respect thereunder. The
Seller is not in violation of any provision of its organizational or governing
documents.
<PAGE>
(k) The Seller has all corporate power and authority to enter into the
Agreement and the Subscription Agreement, and to carry out the provisions and
conditions hereof and thereof, and all consents, authorizations, approvals and
orders required in connection therewith have been obtained.
(l) Neither (i) the issuance, offering and sale of the Private
Placement Shares pursuant to the Agreement nor (ii) the compliance by the Seller
with the other provisions hereof require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except such
as have been obtained, such as may be required under state securities or Blue
Sky laws.
(m) Neither the execution of the Agreement or the Subscription
Agreements, nor the issuance, offering or sale of the Private Placement Shares,
nor the consummation of any of the transactions contemplated in the Agreement or
in the Subscription Agreements, nor the compliance by the Seller with the terms
and provisions thereof will conflict with, or will result in a breach of, any of
the terms and provisions of, or has constituted or will constitute a default
under, or has resulted in or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Seller pursuant
to the terms of any contract or other agreement to which the Seller may be bound
or to which any of the property or assets of the Seller is subject, except such
conflicts, breaches or defaults as may have been waived; nor will such action
result in any violation of the provisions of the Seller's organizational or
governing documents, or any statute or any order, rule or regulation applicable
to the Seller or of any court or of any federal, state or other regulatory
authority or other government body having jurisdiction over the Seller.
(n) The Seller and its directors, officers or controlling persons have
not taken, directly or indirectly, any action intended, or which might
reasonably be expected, to cause or result, under the applicable securities laws
or otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Seller to facilitate the sale or resale of its
Common Stock.
(o) The Seller is not aware of any infringement as to any of its
intangible property rights, nor is it aware of any infringement of any
confidentiality or non-compete agreement.
